Japan's Nikkei Surges While Oil Climbs on Hormuz Uncertainty

Global Markets Split as Tokyo Leads and Oil Pressures Persist

Shares were mixed in Asia on Monday, with Japan's Nikkei 225 leading advances after stocks rose on Wall Street, ending last week with gains. The divergence told a familiar story: enthusiasm for technology driving one market higher while geopolitical anxiety kept others in check. And hovering over everything, as it has for months, was the unresolved crisis in the Middle East.

In Tokyo, the benchmark Nikkei 225 jumped 2.1% to 66,970.22, pulled higher by strong gains for technology companies. Computer chip equipment maker Tokyo Electron climbed 4.1%, while chip testing device maker Advantest rose 6.4%. That kind of tech-driven momentum reflected renewed investor confidence in the sector, even as other parts of the region struggled to keep pace.

In South Korea, the gains were more modest, as the Kospi added 0.8% to 6,305.86 as shares in major chipmakers slipped. Samsung Electronics lost 0.9%, while its smaller rival, memory chipmaker SK Hynix, lost 1.3%. Analysts said foreign investors were selling shares in the Big Tech companies to lock in profits from recent gains and rebalance holdings into other industries.

Wall Street Pauses After a Record-Breaking Week

U.S. stocks had hit a record high on Friday after a weaker-than-expected jobs report caused traders to cut their bets on Fed rate hikes. That momentum, however, did not carry cleanly into Monday's session. The U.S. stock market edged down from its all-time high, with the S&P 500 slipping 0.1% from its record set on Friday. The Dow Jones Industrial Average dipped 60 points, or 0.1%, and the Nasdaq composite fell 0.3%.

Momentum slowed for stocks following a rally powered by soaring profits for big U.S. companies. Reports are on track to show earnings per share leaped 50% in the spring from a year earlier for companies in the S&P 500, according to FactSet. That would be the best growth since five years ago, when the economy was roaring out of the chasm created by COVID. Strong earnings can only carry markets so far when energy costs remain unpredictable and geopolitical risk lingers.

Oil's Climb Tied Directly to the Strait of Hormuz Standoff

Oil rose Monday as traders continued to assess mixed signals from the U.S. and Iran amid worries that a deal between both countries to open the Strait of Hormuz may not be anytime soon. Iranian Foreign Minister Abbas Araghchi said that Tehran is not currently in direct talks with the U.S. to end the war with Iran and open the Strait of Hormuz, while Washington earlier asserted that a deal is near. That contradiction between the two sides rattled energy markets.

The Strait of Hormuz, the vital waterway off Iran's coast through which 20% of global oil consumption flows, has been effectively closed since the war began. The Strait of Hormuz remains effectively closed, and the entry of the Yemen Houthis into the fray is interrupting alternative Red Sea supply routes. With two major shipping corridors compromised, the pressure on global energy supplies has no easy release valve.

What to Watch as the Week Unfolds

In early European trading, Germany's DAX rose 0.3% to 26,411.01, while the CAC 40 in Paris edged 0.1% lower, to 8,703.73. Britain's FTSE 100 lost 0.3% to 10,869.35. The split in Europe mirrored the broader global picture — no single clear direction, just a market carefully reading every headline out of the Middle East.

Earnings are lighter this week, but include semiconductor company Applied Materials, networking equipment maker Cisco, and cloud infrastructure technology company CoreWeave. The yield on benchmark U.S. 10-year notes rose 4.25 basis points to 4.701%, with the market bracing for $125 billion in new issuance this week. With inflation data also due, investors face a week where every data point could either reinforce confidence in the rally — or chip away at it. The Strait of Hormuz remains the wildcard that no earnings report or jobs number can fully offset.